Money Laundering - A Hypothetical Guide Pt 1: The Basics

According to the International Monetary Fund, 5% of the world's GDP, nearly $1.5 trillion dollars is laundered every year. Imagine that. $1.5 trillion dollars is shifted, transferred, transformed, and consolidated in an increasingly complex game of capital cat and mouse. So which are you, cat or mouse? In Part 1 of this hypothetical DIY video presented by OnlineMBA's Minute MBA series, we “teach” you the fundamentals of money laundering. After all, why let corrupt politicians and disgruntled white collar executives have all the fun? Then again, maybe it's not all fun.

As an MBA student you know that there are social and economic consequences to money laundering and that the greatest victims are the poorest of the global community. By focusing your MBA on criminal justice you can translate your education into a banking or government agency career working as an investigator to disrupt the influence of this underground economy.

Stay tuned for Part 2 of the series where we show you some advanced techniques employed by experts in the field as well as identify the consequences of money laundering for those caught in the crossfire.

Video Transcript

Let's say you're a DRUG DEALER, a CORRUPT POLITICIAN, a DISGRUNTLED WHITE COLLAR EXECUTIVE, or a WOULD-BE TERRORIST and you have a big sack of ill-gotten gains.

How big of a sack? One million US dollars in cash weighs around 256 pounds.

The International Monetary Fund estimates that up to 5 percent of the world's gross domestic product--or $1.5 trillion is laundered every year. That's roughly 5,859,375,000 pounds, the equivalent of:

the Wall Street bull + The Statue of Liberty + the Eiffel Tower X 300. Every. Year.

Here's how you'd clean your $1,000,000 of dirty money in just three easy steps:

  1. "Placement" (also known as) Deposit your cash in a bank.
    Next to how you made your money, this is the riskiest phase of the laundering process. To prevent banks from reporting you to the government, keep cash deposits to well below $10,000 and spread it out over 160 accounts in 20 or more banks.
  2. "Layering" (also known as) Move your money around like crazy.This is the trickiest and possibly most fun stage of the laundering process. Try changing currencies with 20%. Buying expensive items like houses, cars, and art work with 30%. Investing in legitimate businesses with the final 50%. The point is to make the original dirty money impossible to trace.
  3. "Integration" (also known as) Collecting your laundry.At this point, your money is no longer dirty. It comes back to you through a seemingly legitimate legal transaction like: Dividends from a savvy investment in a local Italian eatery: $56k- $130k a year.
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